In developing our approach to this review, one of the issues we will need to consider is an appropriate rate of return or return on capital for a number of energy-related businesses. IPART’s preferred approach for determining a rate of return is to use a weighted average cost of capital (WACC). The WACC for a business is the expected cost of its various classes of capital (debt and equity), weighted to take into account the relative share of debt and equity in the total capital structure.
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